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Vertu reports record first half, boosts profit guidance

By Abigail Townsend

Date: Wednesday 13 Oct 2021

Vertu reports record first half, boosts profit guidance

(Sharecast News) - Vertu Motors has upped its full-year guidance after interim revenues and profits powered ahead, prompting it to resume dividend payments.
Revenues in the six months to 31 August came in at £1.9bn, a 72% jump on the same period a year earlier, and an 17% improvement on 2019's interim figure. Adjusted pre-tax profits strengthened to £51.8m from £4.7m a year ago and from £16.9m in 2019.

Pre-tax profits were £51.1m, against £4.0m in 2020 and £16.1m in 2019.

Vertu attributed the improved performance to rising vehicle prices, especially in the second-hand car market, and acquisitions. Demand for second hand car sales has surged this year, as supply constraints, including a global semi-conductor shortage, has hit the new vehicle market.

Vertu said it would restart dividends with an interim payment of 0.65p per share, to be paid in January 2022.

Robert Forrester, chief executive, said: "The record profitability has undoubtedly been aided by very favourable used vehicle market conditions. However, this is a remarkable performance, outperforming market trends."

Looking to the rest of the current year, Vertu - which has 154 sales and aftersales outlets across the UK, as well as an online presence - said it had seen "record" trading in September, with trading profits of £20.0m.

It has therefore upped its final forecasts and now expects full-year adjusted profits before tax of "at least" £65m, compared to previous guidance for between £50m and £55m.

However, it conceded that headwinds remained, including ongoing supply constraints, cost pressures and staffing shortages. The company, which currently has 500 vacancies, said it expected to invest £12m annually to improve staff packages and rewards "to ensure fully resourced, stable teams are in place".

Liberum, which has a 'buy' rating on the stock and a target price of 90p, upgraded its forecasts for 2022 adjusted pre-tax profits by 18.7% to £65.7m.

Analyst Sanjay Vidyarthi said: "This implies second half pre-tax profit of £13.8m, a decline of 30.4% on what was another super-normal performance last year, but materially ahead of the 2020 full-year second half, at £6.1m.

"We think that the order book remains healthy, but visibility on supply remains low. It is unlikely, we think, that supply improves materially before the March plate change. There will be a lagged effect into the used car market, meaning that used car pricing and margins are likely to remain above normal levels."

As at 1030 BST, shares in Vertu were ahead 4% at 56.8p.


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